Wednesday, November 30, 2011

Today’s editorial by Marco Travaglio in Il Fatto Quotidiano is headlined “Giù il cappuccio” (Off with the hood) which he repeats in the text. His point is that the new junior ministers in Monti’s government have political pedigrees (and sometimes not very clean ones) behind their “technical” qualifications. Fair enough… but why introduce the innuendo that they are somehow masons.

Travaglio is a liberal who for a decade or more has been the country’s conscience on corruption and malpractice, mostly Berlusconi’s but not only. So why does he stoop to plot theories?

From the moment Monti was given the job of forming a government, there was a swirl of insinuations first around him and then around his cabinet and now, around the junior ministers too.

Mario Monti after all, is an ideal target for conspiracy theories. He is apparently a man of power but ever understated, quiet and confident with a subtle sense of humour. This in a country where power is usually advertised loudly, certainly in Berlusconi’s version but even before that, ministers and cardinals had costumes and cars which showed their status. In the past the only downplayed power in Italy was the mafia, the ultimate conspiracy.

Monti’s power too, is hidden, so the conspiracy logic goes. He comes from an elite university, the Bocconi in Milan both as a student, a teacher, rector and president. A good proportion of his cabinet are also Bocconiani, enhancing the idea of an old boy network; the rest come from other universities or are managers or professionals (an admiral for Defence, a magistrate for Justice, a diplomat for Foreign Affairs). Monti is also a real catholic (in Italy almost everyone is nominally catholic but few practice beyond rites of passage – hatching, matching and dispatching) as are a significant number of the cabinet. Then there is the banking connection; Monti worked as an international advisor to Goldman Sachs and more sinister for the conspiracy theorists, he has been an active member of the Bilderberg group and the Trilateral Commission. Both are very discreet meeting places for people of influence who discuss international politics and economics off the record and as such easily branded as cabals of devious leaders planning world dominance.

His time in Brussels is well known and well documented as is the mutual respect between him and the EU establishment. But for some, that too is evidence of underhand activity.

A few days after Monti’s appointment, a very loquacious and publicity-seeking Freemason, Giole Magaldi, declared that Monti was a mason on a controversial radio chat show La Zanzara. And that an unspecified number of his cabinet were also masons.

It is difficult to judge how many Italians take the “plot” seriously but the beauty of any self-respecting conspiracy is that it’s impossible to disprove a negative so the temptation to think there must be something there is strong. The original “Protocols” were a plagiarised fraud, uncovered 18 years after they were first published in 1903 but that did not stop Hitler using the text as if it were true. Even today, copies are on sale in many countries purporting to be serious evidence of the “Jewish plot”. It is a story which is flexible (and vague) enough to bend into most real history over the last century which is why it is longlasting and devastating as an antisemitic tract.

The Monti protocols are far more banal but to sustain the plot we can see that the banks (or many of them) have indeed been supported by governments from the US to Greece. There are indeed networks running through Monti’s cabinet (it would be surprising and disturbing if none of them knew any of the others). Hardly Dan Brown stuff, though.
Monti and his colleagues have experience and achievements which can be judged on their merit; his presence in both the Bilderberg group and the Trilateral are part of this curriculum and give us an idea of what sort of policies he will put forward and the methods he will use to implement them.

So far the talk has been of anything but radical policies. The most likely are what he has promised, liberal economics tempered by social justice – hardly a plot. Especially if he succeeds.

There are indeed flaws in some of the ministers and junior ministers’ CVs. Some are definitely not neutral, non-political technicians and some apparently have some shadows in their past and potential conflicts of interest in their present. But Travaglio and other serious journalists should concentrate on that and the real policies that the government proposes, not hoods, aprons and plots.

As Monti was putting his government together, a friend wrote to me asking if he was Jewish… if he was, the last piece of the plot theory would have fallen into place. But who knows, maybe going to mass and appointing lots of Catholics to his cabinet is all just a coverup and Brussels really is run by Jewish bankers and masons… who are preparing to take over Italy.

Monday, November 28, 2011

In his farewell video, Silvio Berlusconi said that he was not going to give up politics… on the contrary, he would double his effort to change the country. One of his supporters here in Rome put up posters saying that he too would “double” whether efforts or stakes in not clear. On the face of it, there is no reason to presume that Berlusconi is out of politics for good.

After he resigned, he pointed out, quite correctly that he had not lost a vote of no confidence and that he still has an absolute majority in the Senate where he has already said that he can pull the plug on the Monti government whenever he wants. Rather more self-servingly, he argued in the message that his move had been “statesmanlike”; in his version, he gave up power for the good of the country. Either way, it was far less than the body blow that many of the foreign media were trumpeting. It was significant that The Economist titled its article “Addio Silvio” not “Arriverderci” (see you again), a hope rather than a statement. Those celebrating his resignation in Rome a fortnight ago were too smart to think either that the country’s problems were over or that Berlusconi had left for good. There has been no political equivalent of the stake through the heart; a resounding defeat either in Parliament or at the polls.

Since then he has again told PdL senators that the government “will last as long as we want it to” and the Monti government has “suspended democracy”.

There were even suggestions that one of the reasons that Berlusconi stepped down was the dip in Mediaset shares. Three days before he went, they tumbled 12.5% . If this was the case, then the conflict of interests had come back to bite him hard and where it hurts, in his pocket. If true, it would have meant that he resigned in order to prevent the collapse of his own companies. The opposite thesis was also aired; that by leaving office, Berlusconi’s companies would have to forego the lucrative government publicity contracts. The fact that both theses are plausible shows how deep the marriage between public and private interest was in Berlusconi’s management.

Yesterday he was again back in the political business… as if he ever went away. In Verona he started what looked very much like an election campaign, one which might last until spring 2013. He launched it with a message that was almost identical to the one that put him in power in 1994. In this clip, he is generous with his favourite words libertà and comunismo going as far as to say that “we must fight for our freedom”. This would be comic in a country where communists are on the endangered species list if it wasn’t for his only concrete definition of the end of “freedom” as being a state where transactions of €200-300 must be verifiable and traceable. He said that such a regulation would put Italy in danger of becoming a “tax police state”. He was saying that “freedom” was freedom to evade taxes.

Granted he has said that he will not stand for office again; granted also that his eyes had narrowed and his face was puffy and he faltered a little on some lines but it was still an expert performance by any standards. It all depends on what sort of appeal the well-worn rhetoric will have beyond the Berlusconi diehards

Even though his departure was precipitate, it was controlled and planned. He produced a video message which was shown across the networks. The fact that a prime minister bowed out with a special message is exceptional – normally resigning leaders confine themselves to a short statement conceding defeat and wishing their successors well. Not Silvio Berlusconi. Either he is in denial and maybe even his analyst could not work that out or he is just resting. Certainly, he is not the retiring type.

Despite his claims of not seeking office again, there is a real possibility that he will make another run for power either in the near future, if the Monti government shows itself unable to calm the markets and elections are called early next year or in 2013 when the legislature reaches its natural term and if Monti is successful in bringing the Italy debt under control and giving some hope to the economy. In order to do it, Monti will have made Italians pay a high price economically and socially and the political parties will be able to blame him for the hurt rather than themselves. Given Berlusconi’s reluctance to support Monti, he will try and present himself as the return to the good times.

In either scenario, he will have his television stations – the three he owns and some residual support in two of the RAI public channels. Monti’s government has neither the time nor the style to move Berlusconi supporters out of positions of power. He still has his print media, dailies and weeklies and of course he still has in practice unlimited financial resources. He has of course lost that other commodity that used so well over the past year, government patronage – a number of his new supporters last year came over with an offer of an undersecretaryship or the like – but he can and no doubt will, promise jobs in his future government.

The other element which helped keep him in power for eight of the last ten years is almost as valid today as before; the divisions in the opposition. For the moment, at least, most of the left, all of the center-left and the center have united around Monti to address the crisis but we can be pretty sure that they will start bickering as soon as elections come round.

Worse, there is at least one dark scandal cloud hanging over the main center-left party, the Democratic Party, (PD). There are allegations of illegal financing in Milan over many years with the main person involved closely linked to the party secretary Pierluigi Bersani. Whatever the truth of the allegations, we can be sure that the Berlusconi media will hammer the story, not one to have on the front pages during a campaign. The centrist UDC is also involved in accusations of corruption involving the state owned Finmeccanica.

Today despite the economic and financial disaster that Italy finds itself it, he still has an approval rating of over 20%. The polls give the center left parties a good majority but over the last few months the biggest party and still growing, are the undecided and non-voters. In the past Berlusconi has been able to bring them out.

There is also the possibility that he will try and act from behind the scenes, hand over gracefully to the party secretary Angelino Alfano. But Alfano is a lightweight and Berlusconi likes the limelight too much.

He still has many obstacles to making a comeback. No longer prime minister, he will find it much more difficult to avoid the hearing in his four trials (three for corruption and one for abuse of power and sex with an under age prostitute) and his party too, like the center-left, is divided. He is also 75 and showing his age so it will not be easy.

After years of saying that Berlusconi was finished and about the leave the scene, it would be unwise to presume that this exit is the definitive one.

Friday, November 25, 2011

Italy’s new prime minister is the antithesis of his predecessor. Not only are there no dirty jokes, orgies and multiple properties vaunted before visiting heads of state, there is almost no spin, no promises and no instant remedies. Mario Monti’s style reflects the other side of Milan and Italy as a whole as does the other Mario – Draghi who took over as head of the European Central Bank a fortnight before Monti became Prime Minister.

He and his ministers have said almost nothing in the week that they have held office. Most have not opened their mouths in public and the ones that have, said very little. Health minister, Renato Balduzzi appeared on Lilli Gruber’s “Otto e Mezzo”, the quietest and most respectable political talk show very different from the Coliseum act that most of the others put on; he did not say very much about what the Monti government would do. The only person who has been outspoken is the development and integration minister (a new post), Andrea Riccardi who reiteratedPresident Napolitano’s statement that the children of immigrants born and brought up in Italy should have Italian citizenship, a controversial topic for the Northern League and some of the right but not part of the government plan.

For his part Monti is working on the supplementary budget measures that he hopes to pass before Christmas. He will need to do a lot more communicating to get it through parliament and a suffering public. His main fault so far has been to move very slowly and very quietly.

Almost certainly the local property tax on first houses (ICI) abolished by Berlusconi will be reinstated. This will take some of the pressure of city administrations which had to cut services or raise charges. There’s a good chance of a wealth tax although the centre-right has said that they oppose it. According to a Demos survey this week, most Italians expect and accept the property tax, the wealth tax and possibly an increase in income tax as long as they are progressive taxes and as long as they catch tax evaders. There is a problem of course in that “tax evasion” is something that only other do, by definition – if I pay a professional or an artisan in cash, that’s not evasion; it’s only the fat cats that evade… So if Monti really does clamp down on the grey economy, there will certainly be reactions.

He will also have to face the pension issue; the same survey showed that raising the pensionable age is very unpopular but will have to be done sooner or later. The other controversial issue is the reduction of job security, something which the unions and the left have made very clear is unacceptable. But it is an issue which Monti can finesse as employers can already lay off employees if the accounts show that the firm is at risk.
Whatever measures he does propose, they will have to navigate between the shoals of the uneasy coalition of centre-left and centre-right. The parties, especially the old centre-right majority have made it very clear that they could bring down the government whenever they want.

All the talk about a technocratic government being “undemocratic” dissolves when faced with the reality of parliamentary supremacy. It is true that Monti was not elected by the people but it is equally true that their representatives will have to accept whatever measures the government proposes.

This reality even allowed Monti a joke when he said in his speech asking the Chamber for their confidence “I would ask you not to refer to parliamentary democracy and the government’s complete reliance on Parliament with the electrical metaphor of ‘pulling the plug’; it is not clear whether we might be considered an electric razor or an artificial lung”. His government is actually both.

Of course the government is weak and vulnerable to whatever winds are blowing through Montecitorio but its very weakness combined with the storms howling outside Parliament paradoxically give Monti a good chance of surviving the full term simply because no one dares to take the responsibility of bringing him down. Both the big parties are internally divided which will also help Monti.

He started well enough in Brussels but that was predictable and it would have been a disaster if he hadn’t come home with at least the verbal the support of Merkozy. Even without concrete measures from Brussels, Italians are happy to see their Prime Minister be treated as an equal by the leaders of the two other big euro economies. If he can get the supplementary budget measures through before Christmas including at least some of the controversial items like property tax on first houses, wealth tax and some labour flexibility measure, then the rest will be (relatively) easy.

Thursday, November 10, 2011

For the oncologist, a cancer can be fascinating – for the patient, rather less. Studying Italian politics is truly enthralling, living it and facing the consequences leaves one a lot less enthralled. The moves and counter moves over the last few days have the allure of the Spassky-Fisher chess clash and are a lot more understandable to the non-initiated, but as a citizen facing the possible consequences of an Italian meltdown is a frightening prospect.

On Tuesday, Berlusconi was to have faced a no confidence vote if he failed to win an absolute majority in the budget ratification vote. In the event, he took 308 votes, eight less than the 316 necessary; “traitors” as he scribbled on his notepad. The next move should have been the opposition tabling a vote of no confidence to be voted on in the next few days. Instead, Berlusconi outmanoeuvred them by promising President Napolitano that he would resign… after the package promised to the EU had been passed. The bill is a complicated one and on Tuesday evening, no one was certain whether it would take a few days or a few weeks. Until then, Berlusconi was safe and in power as no one would table a no-confidence motion while the bill was being discussed. After that, he said he hoped there would be early elections though he allowed that it was the President’s prerogative to decide. He also hoped that the promise of his resignation would calm the markets. The subtext was that in the time before Christmas, Berlusconi might be able to salavage his majority as he had done exactly a year ago.

Instead, the markets went mad. The spread between German and Italian bonds had already reached a new record 495 on Tuesday after the budget vote. Yesterday it went up up to a devastating 570. Ten year Italian bonds were at 7.47%, well over the presumed danger mark of 7%. Berlusconi’s spokesmen try to spin this by saying since he has promised to resign, this shows that it is not his presence which caused the run on the Italian treasury bonds. In fact, though, the markets like the street in Rome, once again, didn’t believe him. He has made too many promises and one to resign without even a date on it, was not plausible. The idea that there might be elections with Angelino Alfano as Berlusconi’s successor also raised eyebrows of disbelief. Alfano would be an obvious front for Berlusconi so would mean absolute continuity.

Faced with turmoil in the markets, President Napolitano made his move. He issued a statement reiterating Berlusconi’s commitment to resign, locking him into that commitment, and saying that the European recovery measures would be passed “with days”, hinting that he wanted the bill on his desk before Sunday to avoid more confusion when the markets open on Monday. Most of the opposition figures said they would support the easy passage of the bill through both houses, at worst abstaining but not obstructing.

Napolitano’s final move was to appoint Mario Monti life senator, a move seen as a prelude to asking him to form a government. Berlusconi himself accepted the proposition of a future Monti government (though some are suggesting he might be finance minister in an Amato government).

It looked as if Berlusconi was on the defensive again, check if not yet check mate.

Monti is by far the best candidate to lead a technocrat government which is the only way out of Italy’s predicament. He is well-respected in Brussels and in the European capital both as an academic economist and a very able politician. As European commissioner for competition, he took on Microsoft and won. He was appointed by Berlusconi and confirmed by the centre-left D’Alema government in 1999 so cannot be called partisan.

Yesterday evening and this morning, it seemed as if it were a done deal with Monti presumably sounding people out for possible positions in a government which would begin early next week with a “huge job to do”.

Now, we are back to uncertainty with part of the PdL calling for elections and part accepting the Monti option. Antonio Di Pietro has said that he will not support Monti but his supporters are furious. Less surprising, the Northern League will not support the technocrat. This leaves the PD, the centrists, some of the left and some of the PdL supporting the government of national unity, far less than the big majority all party support that Monti or anyone else would demand before taking up the job.

The package promised by Berlusconi to the EU when passed, will be a start, but then there will be difficult times, more cuts and greater hardships, possible if the new prime minister can work with most of the parliament, employers and unions and above all show that public sector cuts mean cutting politicians’ privileges.

Tomorrow the bill goes to the Senate – that will be the test… or the next move towards a still distant endgame.

Monday, November 07, 2011

Silvio Berlusconi’s demise is imminent. It might happen tomorrow when the Chamber votes on last year’s budget statement. It might happen the day after tomorrow if the opposition tables a motion of no confidence. It might happen next week when the Senate votes on the reform package that the government put to the European institutions last week. Or he might just be able to drag it out until January.

But when it happens, then the real work will begin to put Italy and indirectly the euro back on track. And how it happens will condition the recovery.

The immediate question is when and how he leaves Palazzo Chigi; certainly there is no lack of pressure to get him out. The opposition had been screaming for months, but that is normal; the European institutions plus Merkel and Sarkozy have been making strong hints since August; his natural allies, the Church and the employers’ federation, the Confindustria have been explicit in their distaste for his person and policy for many weeks. But over the last week or so, an increasing number of party loyalists have been saying that he ought to “step aside” for the good of the party and the country.

The old Christian Democrat stalwart, Beppe Pisanu has said it explicitly for weeks and over the weekend, Berlusconi’s two most faithful followers have added their voices; Angelino Alfano, former minister of justice and now anointed successor and Gianni Letta, Berlusconi’s longterm eminence grise and fixer have tried to persuade him that it would be better to go willingly and have some control on what follows than be pushed ignominiously.

Today, at least, Berlusconi did not get the message – the night and grey light of dawn might make him change his mind.

He spent much of the day with his children and closest business associate, Fedele Confaloniere, presumably working out damage control action for the family’s Fininvest holdings, a good and possibly final example of Berlusconi’s priorities. The euro is at risk through Italian inaction, but the Italian prime minister is looking after family interests.

The constitution, though, gives the prerogative to the President, hence Napolitano’s consultations over the last week to sound out possible alternatives.

If tomorrow’s vote does not pass, then Berlusconi will have to tender his resignation. If it passes without an absolute majority, then the opposition have promised that they will table an motion of no confidence which is likely to pass. Again, resignation. If enough waverers have been convinced by Berlusconi over the night, then the whole performance will be repeated next week when the European package will be voted on.

When it happens, Napolitano will have (at the moment), three choices. The first is a Letta-led government. This would mean continuity as Letta is Berlusconi’s man but it would almost certainly exclude the main opposition party, the PD which has said they will not support Letta. There is some talk of Giuliano Amato, the Socialist leader who took over from a discredited Bettino Craxi in 1991 and introduced swingeing taxes once before. The other possible leader is Mario Monti, former European commissioner, well-respected on the left and the right, in Milan, Rome, Berlin, Paris and Brussels. If takes the job and can put together a team capable of implementing equitable austerity measures and a growth package, then there is hope for Italy and the euro. But it is a tall order

I was asked for an assessment of possible “social unrest if the new government were to put through draconian reforms”. That problem will be high on Monti’s or whoever does get the job, list of risks. There are two reasons for optimism – despite the relative decline over the last decade, Italy is still a wealthy country with savings which can and are already being drawn upon. It also has one of the biggest grey economies in the EU, one which works in areas that Draco does not reach.
So it is unlikely that there will be widespread unrest like in Greece or in Italy in 1968-69 or 1977. With the double underpinning of a revolutionary left wing ideology and mass protests, it is also unlikely that we’ll see widespread terrorist violence as in the ‘70s and early ‘80s.

Still, Italy has a long history of political violence, it is part of the language of politics in the whole of united Italy. It only takes a few hundred well-organised activists as we saw last month, to set Rome ablaze and there are still a few Red Brigade diehards, exiles from a different era, still prepared to murder. And there is genuine hardship with increasing levels of poverty and discontent so Italy next revolution, the one that is just beginning, will not be completely velvet.

But before anything happens, there must be the change of the man on the throne… the substance will follow.

Friday, November 04, 2011

Lele Luzzati’s picture of the she-wolf playing with children of different colours while looking after her foundlings is a perfect image of an Italy we hope is being created. And with a little help from our friends we made a tiny contribution last month with a two day seminar for potential future immigrant community leaders working with the Rome city authorities.

The biggest single change in Italy over the last 20 year is not Berlusconi despite the coverage he gets – it is the dramatically changing face (literally) of the country to immigration, the first peaceful influx of people since the Roman empire.

So far, the experience has been largely positive both for Italians and for the new arrivals and their children but there is no reason to presume that it will always be like that. Already the Northern League has started trying to ride a racist tiger and other politicians are tempted by easy and vicious populism. There have been no riots like the ones in Lancashire in 2001 or in the Paris banlieues in 2005 but the Italian immigrant experience is hardly 20 years old. There are a lot of us who would like Italy to learn from the mistakes of other Europeans and north Americans… put frivolously, to make new mistakes and not the same ones that the British, the French, the Americans have made.

According to the latest Caritas report on immigration in Italy, there are 4,570,000 regular immigrants, or more than 7.5% of the population. Italy has changed dramatically over the last 20 years. When I came to Italy in the 1974, there was one foreign restaurant in the whole of Rome (Eau vive, a French restaurant run by Vietnamese nuns) and a non-white face in the street was a rarity. Today, Rome is still not comparable to London, New York or Paris but it is becoming multicultural. There are ethnic restaurants everywhere, businesses run by immigrants, carers from eastern Europe and Asia and building workers from eastern Europe. Even the village in the country where I do my weekend shopping there is an internet and remittance centre in the square run by Bengladeshis and round the corner, a new shop selling Romanian groceries.

Despite the language used by the Northern League and other anti-immigrant politicians, immigrants contribute massively to Italian society – with their labour which generates growth for the Italian economy and with their presence and their children. Italy is declining both economically and demographically.

The issues are how to integrate this presence.

Since 2003, Rome city council has had four adjunct councillors elected on a continental basis – the Americas, Africa, Asia and (eastern) Europe by resident non-EU citizens (EU citizens have had the vote and the possibility of standing for election since 1997). The have voice but no vote in the council.

Over the last few years, they have presented parts of their constituencies’ cultures – mostly their food and music; it’s more difficult to be anti-immigrant in the middle of a party. This year the fourth edition of “I mondi a Roma” enlisted The American University of Rome to organise a seminar for future leaders.

There are something under a million “new Italians” or “second generation” and 24 of them attended two full day seminars along with a wide variety of others. The aim was to give participants some of the knowledge and skills they might need as well giving them some sort of inspiration and sensation that immigration in Italy is an opportunity not a problem. They were also expected to complete exercises, some on real issues (how would you spend a €500,000 EU grant to support media campaigns for integration), some on more hypothetical but controversial issues (how would you deal with a riot in a poor part of Rome after a policeman shot a young immigrant) or less controversial (how would you mediate the different community needs in the urban renewal of a city square).

On the first day, Rodolfo Giorgetti and Stefania Congia of the Italian Ministry of Labor and Social Policy explained how immigration and diversity enrich the host country and the Ministry’s integration policies. Barbara Fridel and Simona Moscarelli of the International Organization for Migration laid out the legal rights and duties of migrants and governments and finally Maurizio Malogioglio of the Food and Agriculture Organization explained how the importance of remittances.

The four councillors gave their experiences. Madisson Godoy, himself from Ecuador spoke about how the Latin American diaspora contributes to politics at “home” and in the adopted country. Tetyana Kuzyk from the Ukraine talked about role of women – the majority of immigrants for eastern Europe are women and her surprise that Italian women only got the vote in 1946. Victor Okeadu from Nigeria addressed the broader qualities needed for leadership and Romulo Sabio from the Philippines (with a first name like that, his destiny was obviously sealed) explained how a toothpick could become a symbol of office – when the council votes the hundreds of amendments to the annuale budget, the majority has to vote no each time so before the divisions, the group leader distributes toothpicks to jam the “NO” button on the voting panel. As the adjuncts have no vote, that toothpick took on the significance of a royal mace or sceptre. Fabrizio Molina from the NGO “Nessun Luogo è Lontano” showed what political leadership can achieve and Giuseppe Casucci from the UIL’s Migration section explained what the labor movement can do for migrants. And we ended with a workshop prepared by my colleagues Isabella Clough Marinaro and Bjørn Thomassen and myself.

In the distant past, the Empire had non-natives at its head – three of the greatest emperors were foreign born; Trajan in Iberia, Diocletian in Illyria and Septimius Severus in Tripolitania. The Roman Church was rigorously Italian in its leadership from the 16th century until John Paul II but the new Italian nation was formed with the help of Garibaldini from all over the world and one prime minister, Sydney Sonnino had a Welsh mother.

There have already been some naturalised Italian members of parliament but usually by marriage. At the moment, there is one deputy originally from sub-Saharan Africa and one originally from North Africa. With luck there will be more very soon in the Chamber and in the city council.

Thursday, November 03, 2011

Once upon a time in a republic far, far away, every year or so the natives went through a fascinating, time consuming and very baroque rite to decide which of a restricted group of tribal elders should be chief for the next 11 months. Occasionally it took a week or so, other times up to four months. Soothsayers spent hours observing the auguries to try and predict the future leader; the entrails of many birds were examined (and the rest of the bird ritually eaten in specially designated temples or osterie or sometimes trattorie surrounding the sacred mound – Monte Citorio – where the public phases of the selection process took place).

No, it was not the papal election which in comparison is simple, straightforward and apart from one notable exception is quick. The exception was an almost three year conclave between 1268 and 1271 but they adjusted the system and have had no serious problems since.

This was the so-called government crises of the “First Republic”, the system of government that ran Italy from the war (or to be precise, from the 1946 referendum which introduced the republic) until 1994. It was dominated by the Christian Democratic (DC) party assisted by the Socialist Party from the ‘60s onwards. Because of the Cold War, obviously the Communist opposition could not alternate in power in a NATO country so the DC stayed in power for the whole period. It was dubbed “the imperfect two party system”. The DC was a catch-all party going from clerico-fascists on the right to christian socialists on the left with a lot of personal factions in the middle.

These jostled for power – usually positions but occasionally policies by intimating (there were almost no explicit votes of confidence) that they no longer supported the prime minister of the moment. The crisis was normally little more than a re-shuffle of ministers and undersecretaries to reflect the changing power relationship between the factions and it was acted out in a stylised way rivalling Japanese Noh theatre.

If you haven’t lived through the period or studied it, what is happening today is difficult to follow but it mimicks the old ritual.

Then, after a prime minister realised he no longer had the confidence of the houses, he would “go up the hill”, the Quirinal where the President’s palace is, to hand in his resignation. The president would then consult with all the political parties including the smallest and most marginal, and with his predecessors. Then, usually, he would give a mandate to the outgoing PM to form a new government. The prime minister designate would do the rounds, offer jobs and policy measures to see if he could build a majority. If he failed, the president would charge another, normally DC, leader who would do the same.

Over the consultations, there would be sweepstakes opened in all the papers on the chances of this or that candidate making. Political insiders were consulted on their dark arts and darker knowledge.

In exceptional circumstances, he would invite a non-political figure to form a “technical” government with ministers either from across the spectrum as with Ciampi in 1993 or with no party attachment as with Dini in 1995 although Dini himself was an outgoing minister.

Over the last few days there has been a stream of visitors at the Quirinale from opposition and government parties. They look suspiciously like the consultations of the old days although of course Napolitano is at pains to say that they are “informal”.

At the moment the medium long odds are still on Mario Monti to lead “a President’s Government” (a new term) of technocrats supported by most of the parties but there is some talk of Berlusconi’s eminence grise, Gianni Letta taking over a political government with support from enough of the opposition to guarantee a majority. Increasingly, phone in shows have people saying “why doesn’t the president get rid of Berlusconi and give the job to someone else”. All well and good, but the President doesn’t actually have the power to do so until Berlusconi steps down.

But in the meantime, he’s making contingency plans just in case…

The substance of the present crisis is a long, long way from the “First Republic”. The financial crisis is real and the issue of confidence vital for Italy and Europe. Whereas the First Republic prime ministers were part of a carousel and knew that they would be back as cabinet ministers, Berlusconi is fighting for his political life. And whereas old crises could play on for weeks or months, Belgium style, and the country continued steadily, this one is for real and at stakes is the economic future of the country.

Last night, the cabinet passed a major amendment which they promise will become law by the middle of the month. There is no wealth tax but the promise to sell off public property is there and some employment stimuli. There are measures to accelerate the civil law, way overdue but not something which will produce short term effects. Even if the whole amendment becomes law, it will not change Italy’s economy from one day to the next or even the perception of the economy.

The chances of it becoming law are decreasing hour by hour as more and more one time Berlusconi faithfuls are leaving the sinking ship. There is open bickering once again in the cabinet between Berlusconi and Tremonti. The next crunch will be the markets tomorrow and on Monday, the spread between German and Italian bonds; and that other crucial index, the government’s majority in Parliament which sinks as the spread expands.

Wednesday, November 02, 2011

As always, Giannelli is sharp and elegant and this time prescient. A few months ago, the Corriere della Sera cartoonist drew a skeletal version of Leonardo’s human figure on the one euro piece with the caption “ero” meaning “I was” – instead of “euro”. Giannelli’s day job used to be at Italy’s oldest bank, the Monte de Paschi di Siena so his insights into the financial crisis are very much to the mark.

We haven’t quite reached the point that Italy will have to leave the euro but with every day that passes, the possibility becomes less fantastical. That the situation is serious in not in doubt; this morning there was a show of unity from all the independent and centre-left papers calling for Berlusconi to resign. Even the family papers called for action with the oversize court jester, Giuliano Ferrara headlining his editorial in Il Foglio “Cavaliere, do something!”

Yesterday in the middle of the All Saints holiday, Giorgio Napolitano published a letter calling on the government to act. This is the closest a president can get to removing the prime minister. He appoints the prime minister but has no explicit power to sack him; Italy’s president is a largely symbolic figure but he does have some residual powers which come into play when all else fails… like now. Napolitano is pushing the bounds of presidential propriety but as one of the few institutional figures with consistently high approval ratings, Napolitano has obviously felt that he has to act if the government won’t. He is already consulting with opposition leaders as if there was a government crisis. But he can do no more than encourage even if he is backed up by most Italians.

Employers, the church, trades unions and not surprisingly, the opposition all want to see Berlusconi go; his approval ratings hover between a fifth and a quarter. Abroad, his fellow heads of government have gone as far (or further) than protocol allows and first Trichet and now Draghi have made the ECB’s position clear. Van Rompuy and Barroso have made their position explicit as well.

But Berlusconi supporters reacted on Monday to suggestions he should step down by saying that it was the Italian people who choose the prime minister, not the German or French governments. Up to a point… the British changed their leader in May 1940 without elections under pressure from Germany and France, there is no reason why Italy should not do the same today under their this time benign pressure and mutual self-interest. An economic Churchill figure wouldn’t be a bad idea.

Berlusconi, though, shows no sign of being prepared to step down. Minister of Labour, Maurizio Sacconi tried to raise tension by suggesting that there will be terrorist violence to stop liberalisation of job security laws. No doubt there will be more attempts at black bloc violence and it is just possible that some unrepentant individual exiles from the ‘70s might try something but there is no violent subculture ready to sprout into terrorism.

The Minister for Programme Implementation, Rotondi made a not-so-veiled threat to possible wavering support among backbenchers when he said “everyone in the PdL is in Parliament because of Berlusconi – they know that if they don’t vote for him, they will not be re-elected”.

Tomorrow the G20 meets in Cannes and the EU summit follows. Greece’s vote of confidence will create some flutters in the euro but the main problem is now Italy and intrinsic to Italy is Berlusconi.

There are two possible developments. The most direct and constructive is that Berlusconi gets the message and resigns when he gets back from Cannes “for the good of the country”, Monti takes over with an interim government going from Di Pietro on the left to Fini on the right taking in all of the PD and the PdL less Berlusconi diehards.

On that side there is general agreement that there should be a wealth tax and real pension reform, not just old age pensions but those available to anyone who has more than a certain number of year of contributions. Rhetorical and divisive measures like changing the Workers’ Statute to allow easy firing should be dropped. It is an inflammatory measure and irrelevant as companies in difficulty can already lay off workers. Monies raised should be spent on growth promotion measures to raise the GDP and lower the percentage debt.

At the opposite extreme is that the government passes a decree law with a few of the less crucial measures requested by Europe and offered in Berlusconi’s letter last week. It is pushed through with votes of confidence but neither markets nor other international organisations take it seriously enough to reduce the spread between German and Italian bonds; at the same time Greece goes into full default and Italy is next in line. Followed by more partial measures too little, too late with a collapse of government and Italian finance some time in the Spring.

The middle line is that Berlusconi holds on till January and then goes for Spring elections but a lot can happen over the next two months.

At the moment, I tend to the pessimistic option; this afternoon there are more discussions on what sort of measures to take – the government and PdL have been talking about these since August and however serious the crisis seems to be, there always seems to be time to talk and procrastinate. Berlusconi is meeting with party leaders in the afternoon and the cabinet this evening. The measures should be included in a bill which is already before Parliament.

The measures might include yet another tax amnesty (Tremonti is very much against it), sale of public property (but it is not clear if they know how much there is and what price to put on it) and above all, little or nothing for growth.